nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2015‒03‒27
seventeen papers chosen by
Stan C. Weeber, McNeese State University

  1. Political Selection under Alternative Electoral Rules By Vincenzo Galasso; Tommaso Nannicini
  2. Turnout and Closeness: Evidence from 60 Years of Bavarian Mayoral Elections By Felix Arnold
  3. Between plurality and proportionality: an analysis of vote transfer systems By Csató, László
  4. Revisiting the link between PAC contributions and lobbying expenditures By James Lake
  5. Vote buying or (political) business (cycles) as usual? By Aidt, Toke; Asatryan, Zareh; Badalyan, Lusine; Heinemann, Friedrich
  6. Thailand vs. Egypt: reflections on the concept of ‘electoral dictatorship’ By Kawee Jarach; Mark Speece
  7. Does Mandatory Shareholder Voting Prevent Bad Acquisitions? By Becht, Marco; Polo, Andrea; Rossi, Stefano
  8. Wealth Distribution and Individual Voting Preferences: A Comparative Perspective By Piotr Paradowski; Lindsay Flynn
  9. Crime, Incentives and Political Effort: A Model and Empirical Application for India By Kai Gehring; T. Florian Kauffeldt; Krishna Chaitanya Vadlamannati
  10. The Use of Social Media as a Means of Political Communication: Comparision of AKP and CHP’s Facebook Comments in the Local Elections of 30 March 2014 By Emine Kılıçaslan; Hale Bozkurt
  12. Top Management Teams group structure and group dynamics as determinants of companies performance. Evidence from Poland By Małgorzata Marchewka
  13. Network formation with value heterogeneity: centrality, segregation and adverse effects By Andreas Bjerre-Nielsen
  14. Social network site users and political participation in Kyrgyzstan By Elira Turdubaeva
  15. Local Government Reforms under New Labour By Lucyna Rajca
  16. Re-imagining Federalism in India: Exploring the Frontiers of Collaborative Federal Architecture By Sharma, Chanchal Kumar
  17. ‘Doggedness’ or ‘disengagement’? An experiment on the effect of inequality in endowment on behaviour in team competitions By Sean P. Hargreaves Heap; Abhijit Ramalingam; Siddharth Ramalingam; Brock V. Stoddard

  1. By: Vincenzo Galasso; Tommaso Nannicini
    Abstract: We study the patterns of political selection in majoritarian versus proportional systems. Political parties face a trade-off in choosing the mix of high and low quality candidates: high quality candidates are valuable to the voters, and thus help to win the elections, but they crowd out the parties’ most preferred loyal candidates. In majoritarian elections, the share of high quality politicians depends on the distribution of competitive versus safe (single-member) districts. Under proportional representation, politicians’ selection depends on the share of swing voters in the entire electorate. We show that, as the share of competitive districts increases, the majoritarian system begins to dominate the proportional system in selecting high quality politicians. However, when the share of competitive districts becomes large enough, a non-linearity arises: the marginal (positive) effect of adding high quality politicians on the probability of winning the election is reduced, and proportional systems dominate even highly competitive majoritarian. Keywords: electoral rules, political selection, probabilistic voting. JEL codes: D72, D78, P16.
    Date: 2015
  2. By: Felix Arnold
    Abstract: One prediction of the calculus of voting is that electoral closeness positively affects turnout via a higher probability of one vote being decisive. I test this theory with data on all mayoral elections in the German state of Bavaria between 1946 and 2009. Importantly, I use constitutionally prescribed two-round elections to measure electoral closeness and thereby improve on existing work that mostly uses ex- post measures that are prone to endogeneity. The results suggest that electoral closeness matters: A one standard deviation increase in close- ness increases turnout by 1.68 percentage points, which corresponds to 1 6 of a standard deviation in this variable. I also evaluate how other factors like electorate size or rain on election day affect turnout differentially depending on the closeness of the race.
    Keywords: Turnout, closeness, mayoral elections, Bavaria, two-round ballot
    JEL: D72 H70
    Date: 2015
  3. By: Csató, László
    Abstract: The paper considers a general model of electoral systems combining district-based elections with a compensatory mechanism in order to implement any outcome between strictly majoritarian and purely proportional seat allocation. It contains vote transfer and allows for the application of three different correction formulas. Analysis in a two-party system shows that a trade-off exists for the dominant party between the expected seat share and the chance of obtaining majority. Vote transfer rules are also investigated by focusing on the possibility of manipulation. The model is applied to the 2014 Hungarian parliamentary election. Hypothetical results reveal that the vote transfer rule cannot be evaluated in itself, only together with the share of constituency seats. With an appropriate choice of the latter, the three mechanisms can be made functionally equivalent.
    Keywords: electoral systems, mixed-member systems, vote transfer, two-party system, Hungary
    JEL: D72
    Date: 2015
  4. By: James Lake (Southern Methodist University)
    Abstract: Data on campaign contributions of PACs (political action committees) in the US does not contain the PACs' issues of concern. Additionally, while recent US lobbying data details the issues of concern for an interest group, it does not detail the Congressional representatives lobbied by the interest group. Expanding the time-frame of earlier work, I confirm that PACs engaging in lobbying and campaign contributions account for the majority of such political money despite representing a small minority of all PACs. I show how this allows construction of a novel dataset that decomposes representative-specific contributions across issues as well as issue-specific lobbying expenditures across representatives. This decomposition can qualitatively a¤ect results regarding the relationship between political money and Congressional voting behavior on trade policy.
    Keywords: Interest groups, Campaign finance, Contributions, Lobbying, Access, Trade policy, Free Trade Agreements
    JEL: D72 P16
    Date: 2015–02
  5. By: Aidt, Toke; Asatryan, Zareh; Badalyan, Lusine; Heinemann, Friedrich
    Abstract: We provide new evidence on the short-run effect of elections on monetary aggregates. We study month-to-month fluctuations in the growth rate of M1 in a sample of 85 low and middle income democracies from 1975 to 2009. The evidence shows an increase in the growth rate of M1 during election months of about one tenth of a standard deviation. A similar effect can neither be detected in established OECD democracies nor in the months leading up to the election. The effect is larger in democracies with many poor and uneducated voters, and in Sub-Saharan Africa and in East-Asia and the Pacific. We show that the election month monetary expansion is demand driven and can be best explained by systemic vote buying. Systemic vote buying requires significant amounts of cash to be disbursed right before elections. The finely timed increase in M1 that we observe in the data is consistent with this. The timing is inconsistent with a monetary cycle aimed at creating an election time boom and it cannot be, fully, accounted for by other possible explanations.
    Keywords: political business cycles,vote buying,monetary economics
    JEL: D72 E51 O10
    Date: 2015
  6. By: Kawee Jarach (Mahidol University International College); Mark Speece (American University of Kuwait)
    Abstract: Thailand and Egypt have seen some striking parallels in the past few years, culminating in military overthrows of elected governments, acts which were widely supported by the middle classes. This paper examines middle class thinking behind opposition to the governments, and subsequent support for the military takeovers.Both Pheu Thai and the Muslim Brotherhood won elections based on real support, including among middle class voters, although the margins of victory were smaller than sometimes portrayed. (The Muslim Brotherhood won slightly under 52% of the popular vote in 2012; Pheu Thai won just under 50% in 2011.) Once elected, they abused power, pursued their own narrow agendas, and seemed to be dismantling checks, balances, and liberties of truly democratic systems. Thailand’s middle class opposition labeled this ‘parliamentary dictatorship’. Whether it is called this, ‘electoral authoritarianism’, or ‘majoritarianism’, the concept is well known in political science. Pheu Thai and Muslim Brotherhood supporters frequently pointed to their election wins to justify simply doing what they wanted without regard for other views, for law, courts, or constitutions. To the urban middle classes, this is a very narrow understanding of ‘democracy’. They are more likely to agree with Yale law professor Robert Post: “It is a grave mistake to confuse democracy with particular decision-making procedures and to fail to identify the core values that democracy as a form of government seeks to instantiate†(Post 2005, p. 25).The middle classes became disillusioned with electoral ‘democracy’ and shifted hopes to institutions that were supposed to provide checks on government authority, notably the courts. Pheu Thai and the Muslim Brotherhood then tried to control and/or sideline the courts and other independent agencies. “The only remaining barrier (other than the military) to Islamist hegemony is the judiciary. If the Muslim Brotherhood and its FJP take control of courts and judges, this check will disappear, and Egypt could move from liberalized autocracy to electoral authoritarianism†(Brumberg 2013, p. 101).The urban middle classes in both Thailand and Egypt came out into massive street protests, polarization crystalized, and the situation rapidly degenerated. When the military stepped in, there was widespread middle class support for the moves, which is unlikely to dissipate quickly. Brumberg, Daniel. 2013. Transforming the Arab World's Protection-Racket Politics. Journal of Democracy 24(3): 88-103.Post, Robert. 2006. Democracy and Equality. The Annals of the American Academy of Political and Social Science 603: 24-36.
    Keywords: Thailand, Egypt, parliamentary dictatorship, electoral dictatorship, military coup, middle class, political polarization
    JEL: D72 L38
    Date: 2014–10
  7. By: Becht, Marco; Polo, Andrea; Rossi, Stefano
    Abstract: Previous studies of voting on acquisitions are inconclusive because shareholder approval in the United States is discretionary for management. We study the U.K. where approval is mandatory for deals that exceed a multivariate relative size threshold. We find that in the U.K. shareholders gain 8 cents per dollar at announcement with mandatory voting, or $13.6 billion over 1992-2010 in aggregate; without voting U.K. shareholders lost $3 billion. U.S. shareholders lost $214 billion in matched deals. Differences-in-differences and regression discontinuity analyses support a causal interpretation. The evidence suggests that mandatory voting imposes a binding constraint on acquirer CEOs.
    Keywords: corporate acquisitions; corporate governance; shareholder voting
    JEL: G34 K22
    Date: 2015–03
  8. By: Piotr Paradowski (Luxembourg Income Study); Lindsay Flynn (University of Virginia)
    Abstract: The political science literature has neglected the role that economic wealth may play in shaping voting preferences during national elections, most likely because of a lack of data on wealth. This paper examines the influence of net worth as well as its subcomponents, such as debts (housing and non-housing) and assets (financial and non-financial) on individual voting preferences in the United States, with reference to Sweden and Germany. It is found that especially in the United States, and marginally in Sweden and Germany, one’s net worth influences their vote. This paper utilizes individual-level data from the American National Election Studies (ANES), the Comparative Study of Electoral Systems (CSES), and the Luxembourg Wealth Study Database (LWS). Statistical matching methods are utilized to integrate the electoral and wealth surveys. The availability and our harmonization of household socio-economic characteristics as well as the individual socio-demographic and labor market characteristics in LWS, and CSES/ANES make this process possible. This procedure also involves the the use of probit analysis and the calculation of predicted probabilities.
    Keywords: wealth, voting, statistical matching
    Date: 2014–10
  9. By: Kai Gehring (University of Heidelberg); T. Florian Kauffeldt (University of Heidelberg); Krishna Chaitanya Vadlamannati (Norwegian University of Science and Technology)
    Abstract: The large share of politicians facing criminal accusations in India has sparked a public debate and an emerging literature that assesses its causes and effects. We develop a model of the incentives faced by members of parliament when deciding whether to engage in effort for their constituency to assess the effect of their having a criminal background on their decision. We use direct and clearly identifiable measures of effort in the 14 Lok Sabha over the 2004-2009 legislative period: attendance rates, parliamentary activity, and utilization rates of a local area development scheme. The findings suggest that criminal MPs exhibit on average about 5% lower attendance rates and lower utilization rates, but no difference in parliamentary activity. The results depend on the development level of the constituency, a proxy for rent-seeking possibilities and monitoring intensity, as well as on the measurement of criminal background. We use selection on observables, matching techniques, and treatment effect regressions to demonstrate why these negative relations should constitute an upper bound estimate for the causal effect of criminality and to show they are unlikely to be driven by selection on unobservabels.
    Keywords: India; Elections; Crime; Good and bad politicians; Development; Attendance and activity in parliament; Political economy
    JEL: D72 H11 I38
    Date: 2015–03–24
  10. By: Emine Kılıçaslan (Trakya University); Hale Bozkurt (Adnan Menderes University)
    Abstract: The developments in the field of internet and computers have paved the way for the formation of social media and a new media was born. Also, these developments created new platforms for communication. Rapid changes have occurred especially in the last decade. These changes have led social media to develop and pervade into every aspect of our life. In this respect the web 2-based internet has offered people new social environments where they can share theid ideas, feelings and knowledge and even their creativity. Particularly, these developments in social media were seen for politicians as a new field of propaganda and political communication. For this reason, social media platforms are used as an important means for political advertising in election campaigns. This situation arising as a result of technologcial developments has given rise to the widespread appearance of political communication in social media platforms. The use of social media becomes highly important for politicians in political campaigns. Therefore, the notion of ‘digital politics’ and ‘online politics’ have found a place in the political and academic literature. This study is an examination of the working of campaigns taking place in social media during the 30 March 2014 local elections in Turkey. The use of Facebook in political campaigns as a means of political communication is analyzed using the content analysis method. In this way, the political discourses of AKP and CHP are compared on the basis of their campaigns in the last local elections.
    Keywords: Political Communication, Social Media, Local Elections
    JEL: D72
    Date: 2014–10
    Abstract: The developments in knowledge and information technologies provide new opportunities for political corporations and political candidates. They are realizing the potential to give information and build relationships with public using social media. These features gain in importance in fast paced periods like election terms. The social media persents a vast amount of means for information seeking. And among young voters in particular, equipped with means of political information, serve to diffuse political campaign messages to other people. This survey which will be conducted two weeks before the March 30. 2014 local elections among students of the Selcuk University. It will be explored on the grounds of the uses and gratifications approach the motives of university students for using the social media in election periods. In this study will be investigated social media using habits and motives like information/guidanceseeking, social escape, leisure/entertainment, and social utility.
    Keywords: social media, political information, young voters, motivations, uses and gratifications.
    Date: 2014–06
  12. By: Małgorzata Marchewka (Cracow University of Economics)
    Abstract: In traditional approach, company performance is related to Top Management Team (TMT) group characteristics, such as board size and composition, board tenure, age, experience, education, and competences. Initially, TMT characteristics were considered to have crucial significance for group effectiveness and organization performance. However, there is no consensus as to what extend and which TMT demographic features lead to which outcomes. The conclusion reached after numerous studies suggests that the relation between company performance, TMT effectiveness and TMT characteristics is indirect and more complex.As studies based on TMT characteristics fail to explain company performance, the role of group dynamic is becoming more and more significant in analyzing board’s functioning. Dynamic models based on group processes, such as cognitive conflict, ability to use knowledge and skills, and effort norms, indirectly link group characteristics with company performance. According to the concept of group dynamics, team may be described by its static, i.e. structural, characteristics, as well as by group processes such as process of becoming a group member, acquiring and development of group norms, group cohesion, and group effectiveness. TMT effectiveness is understood as boards’ ability to perform their roles: strategic and operational role, control role, and service role. TMT effectiveness, directly depending on group processes and indirectly on boards’ structure, affects company performance. The aim of the article is to analyze the relations between TMT structural and dynamic characteristics, and their impact on companies performance, basing on the research conducted in Poland among 291 domestic companies listed on the main market of Warsaw Stock Exchange from 2010 to 2013. The project was funded by the National Science Centre (Poland) allocated on the basis of the decision number UMO-2011/01/N/HS4/02166.
    Keywords: Top Management Team, supervisory board, management board, effectiveness, group dynamics, group processes, company performance, Top Management Team structure, Poland
    Date: 2014–10
  13. By: Andreas Bjerre-Nielsen
    Abstract: We investigate formation of economic and social networks where agents may form or cut ties. The novelty is combining a setup where agents are heterogeneous in their talent for generating value in the links they form and value may also accrue from indirect ties. We provide sufficient conditions for assortative matching: agents of greater talent have partners of greater talent. A novel feature is that agents with higher talent are more central in networks. Another novel feature is degree assortativity: partnered agents have a similar number of partners. Two suboptimal network structures are noteworthy. One network displays excess assortativity as high and low talented types fail to connect, and thus inefficient due to payoff externalities despite otherwise obeying the conditions of Becker (1973). In another suboptimal network an agent of low talent becomes excessively central.
    Date: 2015–03
  14. By: Elira Turdubaeva (Kyrgyzstan-Turkey Manas University)
    Abstract: There are a few key studies around the social impact of information technologies and Internet access within Central Asia. Kyrgyzstan, with a high level of political participation and an avant-garde position regarding internet access in Central Asia, broadband and social media penetration in the population, is a critical case for studying social media in relation to political participation. New media combined with a high level of internet freedom in Kyrgyzstan is a powerful tool that has the possibility to channel citizen opinion, offer an alternative to traditional print, TV and radio outlets, and craft new methods by which the citizen or collective interacts with the political and social environment (Robbins, 2012).According to some authors, the Tulip Revolution in 2005 in Kyrgyzstan was the ï¬rst revolution amongst post-Soviet nations where the Internet was considered a factor in disseminating information and mobilization political protest. Still in its infancy, the Internet in Kyrgyzstan played its first role – albeit a highly weak one – in supporting anti-government protests which overthrew President Akayev and his government during the “Tulip Revolution†in 2005.In 2010, five years after new media saw its first use as a political tool in the “Tulip Revolutionâ€, the significance of new media was revealed once more when Kyrgyzstan was mired in political conflict between the months of March and June. In March various online communities began reporting on allegations of widespread corruption in then President Bakiyev’s government. In spite of its further attempts to stifle political and social unrest by censoring traditional Kyrgyz media and blocking access to certain Russian TV stations, Bakiyev’s regime was unable to stop the elusive flow of information running through new media outlets. On April 7 an estimated 10,000 protesters gathered around Bishkek and successfully stormed the White House, forcing President Bakiyev to flee the country. This study analyzes the practices and attitudes of social media users and whether using social network sites alone drives previously inactive respondents to political participation. Three types of users – members of political parties, members of interest organizations, and non-members – are interviewed in focus groups about their attitudes to political content in the social network site Facebook.
    Keywords: Kyrgyzstan, Central Asia, political participation, new media, interaction, social media, Tulip Revolution.
    Date: 2014–05
  15. By: Lucyna Rajca (Jan Kochanowski University)
    Abstract: The years 1997-2010 were a period of changes and political reforms in the United Kingdom. The initial years saw some important reforms, such as the ratification of the European Convention on Human Rights and the creation of elected assemblies in Wales, Scotland and Northern Ireland. Devolution has consolidated and augmented differences in the practices of local governments and in legal regulations amongst different parts of Britain. The Labour government has laid strong emphasis on modernization of English local government. Apart from reforms of structures of representative democracy, the government promoted forms of participatory and deliberative democracy. Under New Labour the reforms of local government introduced in England were predominantly implemented according to the concept of local governance. The basic objective of practical implementation of this concept was to reach the two main purposes, i.e. democratic renewal and improvement of services. The New Labour have displayed a tremendous faith in social engineering. All consultation procedures underscored New Labour`s preference for strictly supervised democratic participation. The governmental reform programme aimed at reaching democratic renewal has not produced expected results. In spite of the many reforms, initiatives and funds, political and civil involvement of citizens has not increased. “Democratization†resulted in the mobilization of small groups with greater exercise of government control. In the years 1997-2010 strong emphasis was put on modernization of services. The government was able to make massive investments in public services. The results of national surveys show that there were increases in public satisfaction with most services delivered by local government (but not with local government itself). A substantial factor in improvement of services was the use of instruments of the new public management, in particular top-down performance management and exceptionally restrictive regime of inspection imposed by the central authorities. However, whether these practices actually improved the quality of public services is a matter of considerable dispute.The concept of local governance is not easy to put in practice and to achieve the expected effect. This does not mean that networks are not viable in th
    Keywords: local government, democratic renewal, service improvement, governance
    Date: 2014–06
  16. By: Sharma, Chanchal Kumar
    Abstract: This paper argues that in response to contemporary challenges, the federal governance structure in India requires fine-tuning. A directional shift is required from a cooperative model to a collaborative model of federal governance in view of various endogenous and exogenous imperatives of change, such as rising assertiveness of civil society; rising “self awareness” of regional and local political elites; globalization, privatization and retreat of the central state; and increasing reliance of the national government on intergovernmental coordination mechanisms rather than centralized/hierarchical mechanisms for policy making and implementation. Thus, we reflect on the possibility of supplementing federal practice in India (known for being “federal in form and unitary in spirit”) with collaborative institutions and deliberative processes to achieve policy coordination. Institutional reforms are required to generate the right incentives for welfare enhancing, multi-stakeholder engagement. Three suggestions offered include: expansion of the existing structural and functional horizons of the Inter-State Council (ISC) to engage, inter alia, non-state actors, enabling it to function as a “collaborative council”; offer constitutional status to the newly formed NITI Aayog to prevent it from being marred by ad-hocism; and transfer the financial allocation function to a permanent Finance Commission.
    Keywords: India, federalism, collaborative federalism, cooperative federalism, intergovernmental interactions, coordination mechanisms, NDC (National Development Council), ISC (Inter-State Council), collaborative council
    JEL: H70 H77
    Date: 2015–01–07
  17. By: Sean P. Hargreaves Heap (King's College London); Abhijit Ramalingam (University of East Anglia); Siddharth Ramalingam (IDFC Foundation); Brock V. Stoddard (University of South Dakota)
    Abstract: Teams often suffer from a free rider problem with respect to individual contributions. That putting teams into competition with each other can mitigate this problem is an important recent insight. However, we know little about how inequality in endowment between teams might influence this beneficial effect from competition. We address this question with an experiment where teams contribute to a public good that then determines their chances of winning a Tullock contest with another team. The boost to efforts from competition disappears when inequality is high. This is mainly because the ‘rich’ ‘disengage’: they make no more contribution to a public good than they would when there is no competition. There is evidence that the ‘poor’ respond to moderate inequality ‘doggedly’, by expending more effort compared to competition with equality, but this ‘doggedness’ disappears too when inequality is high.
    JEL: C91 C92 D63 H41
    Date: 2015–02

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